Rise in Foundation Giving Expected to Be Small This Year, Report Says

Foundation giving rebounded last year, hitting a record high of $32.4-billion and is expected to rise

modestly this year, according to a new report issued by the Foundation Center, in New York.

The 66,000 grant-making foundations in the United States increased their giving in 2004 by 4.1 percent after adjusting for inflation, the latest edition of “Foundation Growth and Giving Estimates” reports.

The increase followed a 9.5-percent rise in assets from 2002 to 2003.

For 2005, about 55 percent of foundations surveyed told the Foundation Center that they expected their giving to increase, while 20 percent expected to give about as much as they did last year. One quarter of the 891 foundations that responded to the Foundation Center’s survey question said they expected their giving to decline in 2005.

Based on responses to its survey, the Foundation Center predicted that the overall gain in 2005 foundation giving would be small.

That prediction fits with The Chronicle’s recent analysis of foundation giving in 2004 and 2005 by the very biggest foundations (March 17). While foundation assets have increased, for many grant makers asset levels still lag behind those reached in 2000.

The Foundation Center estimated that foundation assets grew by only about 4 to 6 percent last year, which most likely will translate into modest gains in grants budgets for this year.

The 2004 stock market, the report noted, “fluctuated widely in response to divergent economic forecasts, an expanding deficit, rising oil prices, a deteriorating war situation, and general uncertainty in the run-up to the 2004 presidential election.”

Detailed Trends From 2003

In a second report, the Foundation Center provided detailed analysis of 2003 grant making based on a sample of more than 1,000 of the country’s large grant makers.

That report, “Foundation Giving Trends: Update on Funding Priorities,” found that those grant makers had given 10 percent less in 2003 than they did in the previous year.

The report tracked grants of $10,000 or more from many of the largest independent, corporate, and community foundations in the United States. These grants totaled more than $14-billion, or roughly half of all giving by U.S. foundations in 2003.

Among other findings for 2003:

• Grants for general operating support rose more than 4 percent to account for a record share of grant dollars and grants: More than one-fifth of grant dollars in 2003 went to provide general operating support. Program support continued to receive the largest slice, 44 percent of grants. Grant dollars for capital support, meanwhile, declined by more than 18 percent.
• Science and technology organizations saw the largest decline — a nearly 40-percent drop in support. Among the other major causes that received less foundation grant money in 2003 were social-sciences groups (down 29 percent), religious organizations (down 20.8 percent), and education institutions (down 16.7 percent).
• The vast majority of grant dollars from U.S. foundations — 85 percent — went to charities within the United States. But overseas recipients increased their share slightly in 2003, from 13 percent the year before to 15 percent of U.S. grant dollars.
• The only major cause that attracted more money — and by a mere 0.3 percent — were grants that went to groups working on civil rights, community improvement and development, philanthropy and volunteerism efforts, and public affairs. The growth came largely from increased spending on voter education, disaster preparedness, and national security.
• Education and health groups continued to receive the most support, garnering 25 percent and 20 percent of grant dollars respectively. Human services received the next-highest share, 16 percent.
• A total of 50,413 nonprofit organizations received grants in 2003, down from 52,375 in 2002. The average grant size also shrank from $124,678 to $118,649.

“Foundation Growth and Giving Estimates” and “Foundation Giving Trends: Update on Funding Priorities” are part of the Foundations Today Series published by the Foundation Center.

The giving-estimates report, which is 19 pages, can be downloaded free from the center’s Web site, http://fdncenter.org.

“Foundation Giving Trends” costs $45 for a single report, or $95 for the set of three reports. To order, contact the Foundation Center, Attn: Customer Service, 79 Fifth Avenue, New York, N.Y. 10003-3076; (800) 424-9836. A free summary of the report is available online.

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